Suppose that the demand for apples is perfectly elasticand the government levies a tax on the producers of apples.Assume that the supply of apples is neither perfectly elastic nor perfectly inelastic.
a. How will the price paid by consumers change?
b. Who bears the burden of tax here? Consumers or producers of apples?
c. Is this change in price bigger or smaller than the price change thatwould result if the demand for apples were not perfectly elastic?
d. who would bear the burden of tax is the demand for apples were not perfectly elastic?
e. How will the quantity of apples consumed change due to the tax?Is this change in quantity larger or smaller than the change that would result if the demand for apples were not perfectly elastic?